2026.08.17
Goods in transit insurance
Goods transport insurance and protection of the transported value, our experts explain
When a loss occurs, the question is not just whether insurance exists, but whether the level of coverage is actually sufficient to absorb the financial and operational consequences of the event. Every year, thousands of losses impact global supply chains: damage, theft, fires, weather events, or handling errors. However, many companies discover only at the time of a claim that their coverage does not match the actual risk they face. In an environment of reduced inventory, tighter deadlines, and increasingly international supply chains, cargo insurance has become a risk management tool in its own right.
Why does being insured not always mean being protected?
One of the most common misconceptions is the belief that the carrier’s liability is sufficient to cover the goods being transported. In reality, this liability is governed by national and international conventions that severely limit the amounts of compensation.
When damage occurs, the compensation paid does not necessarily correspond to the actual value of the goods. In many cases, it is calculated based on predefined limits that take the weight of the shipment into account more than the economic value of the product. The consequences can be significant:
- Partial compensation despite a total loss of the goods;
- A significant out-of-pocket expense for the shipper or consignor;
- A deterioration in the customer relationship in the event of a delay or failure to deliver;
- A direct impact on the company’s cash flow.
Consider the example of electronic equipment worth tens of thousands of euros shipped on a single pallet. In the event of total destruction, the compensation paid by the carrier may be far less than the actual value of the product. It is precisely to cover this gap that cargo insurance is justified.
What risks do goods face during transport?
Companies often focus their attention on the risk of accidents. However, property damage can occur at every stage of the supply chain. The main causes of damage include:
- Damage during loading and unloading operations;
- Drops or handling errors;
- Theft and vandalism in transit areas;
- Fires or explosions;
- Natural disasters and storms;
- Transportation accidents.
According to Allianz Commercial’s Safety and Shipping Review 2024 report, logistics disruptions and weather events remain among the main risk factors for global supply chains. For shippers, the cost of a loss is never limited to the value of the lost goods. It also includes replacement costs, delays, contractual penalties, and sometimes the temporary shutdown of operations.
In certain industrial sectors, a single incident of damage can lead to several days of operational disruption and result in losses far exceeding the value of the goods themselves.
The real question: what value should you insure?
The most common mistake is to insure only the purchase price of the goods. However, the actual financial exposure is often much greater. To determine the appropriate level of coverage, several factors must be taken into account:
- The value of the goods;
- Transportation costs;
- Associated logistics costs;
- Replacement costs;
- The potential loss of profit margin.
This is the rationale behind ad valorem insurance, also known as cargo insurance. Its purpose is to cover the declared value of the goods rather than relying solely on the carrier’s liability limits. The key, therefore, is not to purchase a standard policy, but to align the level of coverage with the actual economic risk.
Let’s take an example. A company ships goods worth €100,000. Added to this amount are €8,000 in logistics costs and €15,000 in expected profit margin. In the event of a total loss, the economic exposure far exceeds the mere value of the product. Underinsured coverage therefore risks leaving the company with a significant financial loss.
Not all shipments involve the same level of risk
Insurance needs vary significantly depending on the goods being transported, the destinations served, and the modes of transportation used. Effective coverage is therefore based not only on the value of the goods but also on the actual risk associated with the route.
The mode of transportation influences the nature of the risk
The challenges encountered in road transport differ from those observed in air freight, where the unit value of goods is often higher and deadlines are more critical. Conversely, ocean freight is more exposed to weather events, general average, or damage related to long voyages.
The challenges also evolve in the context of rail freight or multimodal transport, where multiple parties are involved in succession during a single operation. The more transshipments there are, the more complex the risks of damage and liability issues become.
The security level of the countries traversed is factored into the assessment
A transport security assessment is a key step in selecting the appropriate level of protection. The country of origin, country of destination, transit countries, security level of the areas traversed, frequency of stops, and exposure to theft directly influence the risk assessment.
The same shipment will not require the same level of coverage depending on whether it travels along a secure route or through an area where the risks of theft, vehicle immobilization, or cargo damage are higher. The cost of insurance may therefore vary depending on the country of origin, the country of destination, the transit countries, the security level associated with each area, and the necessary protective measures.
Companies that regularly ship via pallet transport must also factor in the risks associated with handling, stacking, or transfers between distribution centers. The right coverage therefore depends on the operational realities of the route and the associated level of risk, rather than on a one-size-fits-all insurance model.
How can you build coverage tailored to your business?
Effective insurance goes beyond simply purchasing a standard policy. It is based on a preliminary analysis of the risks and constraints specific to each company. Several questions arise:
- What is the average value of shipments?
- What are the most likely risks?
- What would be the financial impact of a major claim?
- How sensitive is your business to delivery delays?
- Are the goods easily replaceable?
- What are the current compensation limits?
A company capable of absorbing the loss of a package worth a few hundred euros will obviously not have the same needs as a manufacturer whose production depends on receiving a critical component.
Analysis of exclusions also warrants special attention. For example, some policies exclude damages related to inadequate packaging, certain natural disasters, or specific categories of goods. Poorly tailored coverage often creates a false sense of security.
Freight insurance: a tool for logistical resilience
Freight insurance is not merely an administrative formality. Its fundamental role directly contributes to business continuity, cost control, and the fulfillment of customer commitments.
In an environment where supply chains are increasingly global and exposed to unforeseen events, the challenge lies less in whether a loss will occur and more in measuring a company’s ability to absorb its consequences. GEODIS supports companies in this process by assessing risks, analyzing coverage levels, and identifying the solutions best suited to the specific characteristics of their operations. The goal is clear: to limit financial exposure, safeguard goods, and sustainably strengthen the resilience of the supply chain.
Talk to the experts at GEODIS to assess your level of coverage and secure your freight operations.